Labor & Employment Law Blog

II. The Underlying Case: Plaintiff’s Attempt to Circumvent Her Arbitration Agreement, Yet Still Pursue Representative PAGA Claims

Leeper’s underlying lawsuit involved a single PAGA cause of action, which Leeper alleged on a “representative, non-individual basis.” She sought to recover non-individual civil penalties for the purportedly aggrieved set of employees. Leeper went so far in her complaint to specifically address her arbitration agreement (in an attempt to avoid its effect), stating: “Because [Leeper] alleges only non-individual PAGA claims on a representative basis, Shipt cannot compel them to arbitration.”

III. Plaintiff’s Attempted Reliance on Balderas

Like many other plaintiffs seeking to avoid their individual claims being compelled to arbitration, and instead litigate a “headless PAGA action,” Leeper attempted to rely on language from the Court of Appeal’s decision in Balderas v. Fresh Start Harvesting, Inc. (2024) 101 Cal.App.5th 533 (Balderas), to support her argument that a PAGA plaintiff can choose not to bring (or “disclaim” or abandon) their own individual PAGA claim so as to avoid arbitration.  

IV. The Outcome

In Leeper, the court examined and confirmed that the unambiguous text of the PAGA statute authorizes only claims for civil penalties brought by (1) a current or former employee plaintiff, and (2) other current or former employees. Both prongs are required. The court also dealt with Balderas head on, explaining that Balderas, a case about standing, not arbitration, does not support the position that a plaintiff can maintain a purely representative PAGA claim. In fact, the court pointed out that the Balderas holding does not address (nor did it have occasion to discuss) whether a plaintiff may carve out an individual PAGA claim from a PAGA action (i.e., anything read into or from Balderas on the issue is dicta.)  Distinguishing Balderas is important because plaintiffs were relying on language from that that decision that was not part of its holding, but now in Leeper, there is Court of Appeal authority on this specific issue that is binding on all Superior Courts. 

V. Potential Challenges to the Leeper Decision

Plaintiffs may attempt to argue Leeper is not binding, but unless a different district or division of the Court of Appeal issues a contrary opinion on the specific issue, there is no “split” of authority allowing a lower Superior Court to choose which decision to follow. 

Strong arguments exist that other Courts of Appeal should not reach a different conclusion:  The express terms of the PAGA statute reflect the necessary outcome arrived at in Leeper. The decision in Leeper is in line with the post-Viking River Cruises, Inc. v. Moriana (2002) 596 U.S. 639, framework of PAGA jurisprudence. Generally, an “aggrieved employee” has standing to maintain a PAGA action even if they do not specifically assert an individual claim (Balderas), but that PAGA action nonetheless includes an “individual PAGA claim” that may be subject to an arbitration agreement (Leeper). So, employers should continue to implement, rely on, and enforce their employment-related arbitration agreements wherever appropriate.

 VI. Takeaways

This decision is a good outcome for employer defendants, and in our view, the right one based on the provisions of the PAGA statute itself (both originally, and as recently amended).  Employers should work with experienced employment counsel to promptly review their arbitration agreements to ensure enforceability when necessary. Employers with questions regarding how to craft a compliant, integrated arbitration agreement may contact the authors of this post or their usual employment law counsel at AALRR.

This AALRR publication is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other AALRR publication does not create an attorney-client relationship. The Firm is not responsible for inadvertent errors that may occur in the publishing process.

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